Until a couple of years ago, Sandhya S didn't even try to look for a job in a BPO (business process outsourcing) firm. With her chronic tonsilitis, the 20-something Mumbaikar wouldn't have been able to cope with attending calls for eight hours at a stretch.

Now, lack of opportunity is not an issue: Sandhya's inundated with job offers. No, she hasn't found a magic cure for her throat ailment. It's just that Indian BPOs are now doing business in very different ways.

India's BPO landscape has changed. And how. In 1999, when the BPO boom had just taken off, voice-related services contributed to 85 per cent of the Indian BPO industry's share of business.

Seven years down the line, voice accounts for just 35 per cent. Sunil Mehta, vice-president, Nasscom, the industry body for Indian IT and BPO companies, agrees: "The services have moved from voice to non-voice like automotive design, insurance claim processes, mortgage loans and so on."

When BPOs started off in the 1990s, Indian BPOs offered many young graduates their first appointment letter. These fresh-out-of-college employees (called agents) were expected to call customers in the US or any European country to chase payments of credit card defaulters. Otherwise, they received calls for troubleshooting - issues ranged from PCs to Internet and travel services.

But this low-cost advantage did not remain for long. As more and more Indian BPOs emerged, they started pitching in the same geographies (the US, the UK, Australia and so on) on the same "lower price" promise. The low-cost proposition was degenerating into a zero-sum game.

According to industry experts, between 2002 and 2005, the average revenue per hour (for a single terminal) dropped from $14 to $12. That meant a straight fall in revenue of around 15 per cent. "BPOs have begun to realise that the traditional sources of cost advantages - manpower and infrastructure costs - may not remain sustainable after a point in time," accepts Susir Kumar, CEO, Intelenet Global Services.

So what's changed?

From cost to consulting

"Labour arbitrage used to be the main driver for outsourcing. Now the drivers are more business-related," says Ananda Mukerji, managing director and CEO, ICICI OneSource. Simply put, BPOs are stepping in as advisors. And it's not just the BPOs who are claiming this change in function; even consultants agree. "Now BPOs are also becoming strategic partners of the client," says Kuchibhotla.

For instance, previously, overseas clients required BPOs to replicate their in-house processes offshore. A set of SLAs (service level agreements) were defined and BPOs were expected to deliver them. A typical SLA would include parameters like call handling time, percentage resolution of complaints and so on.

Now, SLAs are hygiene factors. ICICI OneSource executives claim that they now embark on an extensive discovery process of the client's operations, study the current processes and business goals of the client and then suggest suitable offshoring strategies. Industry executives say they now advise clients on which processes are best left onshore and why.

For instance, a client called ICICI OneSource to perform a process assessment to uncover opportunities that would increase sales or reduce operating costs. The scope of this assessment was confined to the major business functions of customer acquisition, order management, customer care, and service assurance.

The approach used by the BPO's team was to analyse existing data, followed by observing operations and interviewing relevant employees at the client's end, before making recommendations.

"Clients expect best practices in process management and optimisation not just for the offshored processes, but also for their own internal operations," says Mukerji and adds, "the progression curve of the BPO business is not about being a consultant. It's about business critical solutions."

Front is not the end

It used to be that call centre agents were restricted to be being just the client's face (okay, voice) to the customer. But as BPOs realised, they were getting just a fraction of the outsourcing business from any single client. "Offering a platter of services enables BPOs to draw in bigger and better deals," explains a Delhi-based expert.

Progeon, the Rs 379-crore (Rs 3.79 billion) BPO division of IT major Infosys, recently tied up with a mortgage company where Progeon offers end-to-end solutions, from the initial voice calls to managing monthly installments and even chasing loan defaulters.

And if they don't manage end-to-end contracts? Some BPOs are even giving up businesses that involve only voice. Wipro BPO (previously Spectramind), is one instance. About a year ago, the company opted out of services like telemarketing. "Outbound voice doesn't fetch high margins," says Manish Dugar, vice-president, finance, Wipro BPO.

Also, while delivering only voice services, BPOs incur higher training costs. Industry sources point out that a beginner's salary in a voice service would be Rs 10,000-12,000 a month, while salaries for agents handling low-end non-voice tasks like processing transactions is in the Rs 8,000-10,000 range.

"Voice processes represent a perpetual activity and are capital-intensive in nature. Though non-voice work can be automated, one can't automate voice," says Intelenet's Kumar.

Of course, BPOs have been automating where possible. For instance, Progeon developed auto match rules for a financial services client that had outsourced its stock and cash reconciliation processes.

The new technology automatically reconciles financial statements. The result? Progeon no longer needs staff for this job, which would have added another 50 per cent to the process costs.

Against the wave

Job attrition in India has been a big issue of concern with most BPOs. Then, there has been a backlash from the West. How are BPOs tackling this? At the moment, BPOs invest 8-12 weeks on training and four or five weeks on refresher courses for each employee.

With close to 75 per cent of employees quitting their call centre jobs within the first year, all that investment goes waste. Also, the talent pool in big cities is drying up. Three years ago, BPOs recruited 10 employees for every 100 people they interviewed. Now they find only two-three potential employees for every 100 candidates.

Hence, BPOs are going to - the tier two towns. And it's not just about centres in Pune and Jaipur, but even Trichy and Visakhapatnam. Small towns also mean lower overheads. For instance, manpower rates in Mumbai are the highest at Rs 51.6 per hour for the starting level agent, followed closely by the NCR (national capital region) at Rs 50.9, whereas in Kochi, the cost would be just Rs 17.

But it's not just about India anymore. To access a talent pool that is fluent in two languages (like French-English), BPOs are even starting operations in Mexico and Eastern Europe, primarily for the voice business.

That tackles even the anti-India backlash, because callers don't bother to know who owns the BPO. Wipro and Infosys have a presence in Europe, so does ICICI OneSource.

So, is the change in BPO strategies working? At present, the global business makes up only 5 per cent of the turnover for Indian BPOs. Tier two towns make up 20 per cent of business as the $6.3 billion ITES-BPO segment grows at 37 per cent a year (source: Nasscom).

While it's still early to talk about the sustainability of the strategic shift, someone is smiling. As Sandhya enters the office of a prospective BPO employer, she does not have to clear her throat or pop lozenges.